US McKinsey company cashing in on 'refugee management' contracts with Germany, Sweden, and city of Berlin-Deutsche Welle, 3/18/16

3/18/16, "Berlin's refugee 'masterplan' hit with suspicion of cronyism," Deutsche Welle, Ben Knight

"Berlin's mayor has been forced to answer questions in parliament over the decision to grant a lucrative contract to the consultancy McKinsey. The US firm has hired one of the mayor's old party colleagues.

The list of companies turning a profit from Germany's influx of refugees grew a little longer in early March, when US consultancy McKinsey signed a 238,000-euro ($268,000) contract to come up with a plan to integrate the city's influx of 80,000 refugees.

Now that deal, much criticized a month ago because it had been handed to the company without a tender process, has gained an extra bitter aftertaste. McKinsey, who had worked pro bono for three months to deal with the chaos at the health and social affairs authority (LaGeSo), admitted this week that former politician Lutz Diwell, from the same party as Berlin's mayor, Michael Müller (pictured), has been hired to work on the job. Now suspicions are being aired by local media that Müller's government helped the mayor's old comrade to the lucrative position.

The suspicion turned into a fraught exchange in Berlin's state parliament on Thursday, when opposition MPs demanded that Müller appear in the chamber to answer questions on the deal. Müller had been excused from the session because of a conference elsewhere, but the representatives from the Left, the Greens, and the Pirate party successfully called for the session to be suspended until Müller could appear.

Müller arrived in the early afternoon - "visibly annoyed," according to the "Tagesspiegel" newspaper - and admitted to the parliament that his office had known "during the course of January" that there had been "further contact between Lutz Diwell and McKinsey." That was several weeks before the contract with the city was signed, though the government claims it made the decision to give the contract to McKinsey in late December.

What is a consultancy for?

"It's become completely absurd now," said Elke Breitenbach, Berlin parliamentarian for the Left party. For her, the whole affair was suspicious from the start, not least because the value of the contract was just below the threshold that forces state contracts to be put out to tender.

"The first scandal was that it had gone out without a tender, on the grounds that only McKinsey had the ability to create this masterplan," she told DW. "Now the masterplan is here, without a single concrete measure, without a timetable - it's very meager, what was presented."

Given these circumstances, Diwell's hiring makes no sense to Breitenbach: If McKinsey was the only company with the expertise to draw up a plan, why suddenly introduce a new expert - who happens to be a former politician? "Any authority should be able to come up with an administrative plan," said Breitenbach. "And the result that they've come up with only makes things vaguer."

Compounding the confusion, Berlin's Integration Minister Dilek Kolat claimed that her integration masterplan was still being drawn up, and that McKinsey's contribution was confined to "general issues": "What are the international prognoses for refugee movement, what does that mean for Berlin? Also the relation with the federal authorities - those are tasks that McKinsey can take over," she told local broadcaster RBB earlier this month.

Business ties

In January, the city responded to the well-publicized images of the misery at LaGeSo (hundreds of refugees standing in line in mud and rain for days) by replacing the head of the authority with Sebastian Muschter, an administrative specialist from McKinsey.

"McKinsey were at LaGeSo before, and it was always said that this doesn't have anything to do with the new masterplan," said Breitenbach. "But then suddenly there was this contract."

Other members of the Berlin government defended McKinsey's expertise. Björn Böhning, head of Berlin's government chancellery, said, "The company McKinsey advises the Swedish government and the German government in refugee management and in integration. Therefore it's an outstanding experience that we're drawing on." McKinsey, for its part, did not respond to a request from DW for comment.

Christian Goiny, budget spokesman for the Christian Democratic Union - the junior partner in Berlin's government - said the aim of McKinsey's plan was to group the various problems related to integrating refugees and "work out suitable concepts" that would help refugees to get German lessons and find a way into the city's job market or education system.

Goiny also dismissed Breitenbach's criticism. "So the government gives the contract to someone with a high expertise, and people don't like it again," he told RBB. "Mrs. Breitenbach just wants to throw sand in the works."

"I just want to see the whole affair cleared up," countered Breitenbach. "That means all the contracts and agreements need to be laid open.""




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